BOSTON (CBS) – College is expensive. And many wonder if it is worth the cost.
I believe it is! Study after study has shown that for the most part college graduates do better. But they need a marketable degree.READ MORE: Salmonella Outbreak Includes 7 Sick People In Massachusetts
Saving for college should start when your little one is still in diapers! However, it is never too late to begin at any age.
A good place to start to save is with a 529 Plan. College savings plans can now be set up so that the money is invested in mutual funds and grows tax deferred.
Massachusetts offers two options; the UPlan and the UFund. Both plans are managed by the Massachusetts Educational Financing Authority (MEFA).
The UPlan enables families to lock in future tuition and mandatory fees at today’s rates at 80 participating Massachusetts schools.
And now we have a tax break for using a 529 Plan, you can claim a Massachusetts state income tax deduction for contributions to the UFund Plan. Single taxpayer may claim up to a $1,000 deduction, and married persons filing jointly may claim up to a $2,000.READ MORE: Acadia National Park In Maine On Track For A Record Year
The 529 dollars can be used to pay for not only tuition and fees, but other qualified education expenses as well, including room and board, supplies and equipment including that new computer the school requires.
The advantages of the 529:
- No income limit restrictions when contributing to the plan
- Tax free withdrawals; no Federal or Massachusetts income tax due on distributions
- $50 minimum to open an account
- You can set up an automatic investment plan for as little as $15
- Funds can be used at any accredited college nationwide
- The account is not in the student’s name, presently it is considered an asset of the custodian, usually the parent or grandparent
- Can be used for other family members
- You make the portfolio choices
- Low-cost investment options
- High contribution limits ($400,000)
- Annul Gifting limits are now $14,000, a donor can gift $70,000 in one year and it will be considered an accelerated gift for 5 years. Their spouse can join in for $140,000
A good place to learn more; The Saving for College website.
One more thing: For the record, I opened a Massachusetts 529 plan managed by Fidelity for my granddaughter two days after she was born. It’s now connected to my credit card and I earn 2% every month that goes into her account and every year on her birthday I make another contribution.
You can hear Dee Lee’s expert financial advice on WBZ NewsRadio 1030 each weekday at 1:55 p.m. and 3:55 p.m.MORE NEWS: Bill To Scrap MCAS Test Is Subject Of Virtual Public Hearing
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